The UK has retained its right to allow workers to opt out of a maximum 48-hour working week after talks collapsed in Brussels last night.

Last night's negotiations were the latest in a series of meetings on the working time directive which have failed to break the deadlock between the European parliament demanding a deadline for scrapping the opt-out, and governments offering to accept an absolute working hour ceiling of 65 hours a week in return for keeping the right to exceed 48 hours.

The failure to reach an agreement means workers in the UK and more than a dozen other states will continue to be given the right to choose to work longer than the maximum 48-hour working week.

With MEPs stepping down to face elections in June, both sides have agreed to abandon the negotiations. The current European commission is also stepping down after the summer, but the incoming commission team is likely to produce new proposals later in the year, which could include fresh plans to end the opt-out.

The UK's employment relations minister, Pat McFadden, said: "We refused to be pushed into a bad deal for Britain. We have said consistently that we will not give up the opt-out and we have delivered on that pledge.

"Everyone has the right to basic protections surrounding the hours that they work, but it is also important that they have the right to choose those hours."

McFadden said the opt-out had worked successfully in the UK and other member states. He added: "The current economic climate makes it more important than ever that people continue to have the right to put more money in their pockets by working longer hours if they choose to do so."

The business secretary, Lord Mandelson, said: "Millions of people are better off because of the opt-out and I am relieved we have been able to resist its removal."

The Liberal Democrat MEP Liz Lynne, vice president of the European parliament's employment and social affairs committee, has long campaigned to keep the opt-out. She argued that its removal would push people into illegal work where they would no longer be covered by health and safety legislation.

"I have always argued that the opt out of the 48-hour limit in the working time directive should be retained so long as it is truly voluntary. Workers should be allowed to earn overtime if they wish to."

She added: "My hope now is that we will see a far more sensible proposal in the future that deals with the health sector alone – it was only ever in this area that we needed changes following rulings from the European courts."

However, trade unions were disappointed that talks had collapsed again. The TUC's general secretary, Brendan Barber, said that an opportunity had been missed to end the UK's "dangerous long-hours culture".

"Long hours cause stress, illness and lower productivity. And when many employers are moving to short-time working, the need for an opt-out of the 48-hour week is even more out of date," he added.

"The UK government will still have to tighten the law on working time, otherwise the EU could take the government to court to protect UK workers from abuse of the 48-hour week."